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“Production overload in Far-East Asia and China manufacturing are severely affecting the supply chains of Japanese manufacturers. In order to overcome this competitive environment, we like to enter into joint ventures with Sri Lankan firms and overcome our supply chain constraints. We are now planning to bring a strong business and investment delegation to Sri Lanka in October. It is not just another 20-30 type of team but a much stronger delegation,” revealed Daisuke Hiratsuka, the Executive Vice President of the powerful Japanese trade and investment arm, Japan External Trade Organisation (JETRO) on 28 June.
Hiratsuka was addressing Minister of Industry and Commerce Rishad Bathiudeen at the Ministry premises in Colombo. Hiratsuka was in town heading a JETRO team to Colombo. Also meeting Minister Bathiudeen, along with Hiratsuka, were Ambassador of Japan to Sri Lanka Nobuhito Hobo, JETRO Senior Coordinator for Southwest Asia Naoyuki Maekawa and Embassy of Japan JETRO Colombo Official Resident Representative Masahide Sakishige. Also present during the session was JETRO Colombo Director Tissa Galagoda.
At present, there are about 60 enterprises with Japanese investments operating in Sri Lanka under the BOI Law, totalling to US$ 440 m, providing more than 12,000 employment opportunities for Sri Lankans (in the period of 2008 to mid-February 2013 alone, 14 Japanese project agreements valued at $ 91 m were entered to under S.17 of BoI Law).
During the official working visit to Japan of President Mahinda Rajapaksa in March 2013 at the invitation of the Prime Minister of Japan Shinzo Abe, both leaders in their joint statement noted “the need to dispatch a Japan External Trade Organisation (JETRO) joint investment mission to Sri Lanka, as a follow-up to the investment seminar that would take place during the President’s visit to Japan, to conduct JETRO’s survey on needs and strategies for Japan-Sri Lanka business, and to dispatch experts from New Energy and Industrial Technology Development Organisation (NEDO) in order to explore the possibility of bilateral cooperation.”
Bathiudeen, addressing Hiratsuka, said: “We keenly look forward to the Japanese delegation as a result of this bilateral joint statement. I and my Ministry not only extend our fullest cooperation, but can also make special B2B matchmaking arrangements between Japanese and Lankan businesses on B2B level. As for investing in Sri Lanka, Japanese manufacturers have a ready base in Sri Lanka to strengthen their supply chains by shifting here with Sri Lanka’s five hub positioning opportunity. The Indo-Lanka Free Trade Agreement and Pakistan-Lanka Free Trade Agreement are other great opportunities that have not sufficiently been exploited by global investors here.” Hiratsuka thereafter apprised Minister Bathiudeen: “It is important that Sri Lanka listens to the voice of the present Japanese investors in Sri Lanka. Japanese manufacturers consider total costs when it comes to evaluating new overseas investments.
For instance, air transport costs from Sri Lanka are higher than air cargo costs from Thailand or Laos despite Sri Lanka’s distance being lesser than these destinations. This is a concern for Japanese investors to Sri Lanka. Also some of the Japanese investors in Sri Lanka who were planning to increase their investments stakes here, have now decided to withhold their new investments due to the recent hike in power and energy costs. A Japanese BoI firm in Sri Lanka in apparel manufacture and exports with more than 650 employees has discovered that its production costs have increased by a huge 20% after the recent electricity tariff hikes, making their apparels suddenly uncompetitive. And as a result, they have decided to hold back any new investments in Sri Lanka for the time being.”
Minister Bathiudeen responded: “We at the Industry Ministry are well aware of this situation and are looking for ways to provide electricity tariff subsidies to industries in Sri Lanka. Discussions are currently ongoing with various stakeholders in this regard. In fact, we encourage hi-tech Japanese investments to our energy sector, especially the renewable energy. The Japanese investors can gather even more details of investments to this sector in the forthcoming Sri Lanka Roadshow planned in Tokyo, focussed on Sri Lanka’s next expo, the Expo 2014, to be held in August 2014 in Colombo.” Hiratsuka then pledged: “We shall extend the fullest cooperation of JETRO Tokyo and Japanese Chamber of Commerce to the forthcoming Sri Lanka Roadshow planned in early 2014. We too believe that there are strong unrealised potentials in bilateral trade levels between the two countries.”
According to the Department of Commerce of Sri Lanka, the total trade between Sri Lanka and Japan, which stood at US$ 493 m in 2002, has increased by 56% to $ 770.11 m by 2012. Though the total trade had declined in 2009 due to the impact of the global recession, it recovered in 2011.
